# Class 7 Simple Interest

Introduction to Simple Interest

## Introduction to Simple Interest

Sometimes we borrow money from banks or moneylender for a specified period. At the end of this period, we must pay back the money which we borrowed and some additional money for using the banks or lenders money.

## Principal

The money we borrowed from bank or moneylender is known as Principal.

## Interest

The additional money paid by the borrower is known as interest.

## Amount

The total money paid by the borrower to the bank or moneylender at the end of the specified period is known as amount.

**Amount = Principal + Interest**

## Rate of Interest

It is the interest paid on Rs. 100 for one year. For example, a rate of 12% per annum means that the interest paid on Rs. 100 for one year is Rs. 12.

## Time

It is the times for which the money is borrowed from bank or moneylender.

## Simple Interest

If interest is calculated uniformly on the original principal throughout the loan period, it is known as simple interest.

I = ^{(P×R×T)}⁄_{100}

I = Simple Interest

P = Principal

R = Rate of interest

T = Time

Let's see some examples to understand it better.

**Example 1.** Rs. 2000 is given at 9% per annum simple interest for 2 years. Find the interest which will be received at the end of two years.

**Solution.** Principal (P) = Rs. 2000

Rate of interest (R) = 9%

Time (T) = 2 Years

Simple interest = ^{(P×R×T)}⁄_{100}

= ^{(200×9×2)}⁄_{100}

= Rs. 360

Hence, the interest amount after 2 years is Rs. 360.

**Example 2.** Find the simple interest on Rs. 15000 at 8% per annum for 5 years. What will be the total amount after 5 years?

**Solution.** Here, P = 15000, R = 8% and T = 5 years

Interest = ^{(15000×8×5)}⁄_{100}

= Rs. 6000

Total amount = Rs. 15000 + Rs. 6000

= Rs. 21000

Hence, the total amount will be Rs. 21000

**Example 3.** For a certain principal bank paid after 6 years is Rs. 12000 at a rate of 10% per annum. Find the principal amount.

**Solution.** Here, I = Rs. 12000, T = 6 years and R = 10%

I = ^{(P×R×T)}⁄_{100}

=> P = ^{(100×I)}⁄_{R×T}

=> P = ^{(100×12000)}⁄_{(10×6)}

=> P = Rs. 20000

Hence, the principal is Rs. 20000.

**Example 4.** A person borrowed Rs. 4800 at 12% interest per annum from a bank. At the end of 2 ^{1}⁄_{2} years, he cleared the loan. Find the total amount he paid to the bank.

**Solution.** Here, P = Rs. 4800, R = 12% and T = 2 ^{1}⁄_{2} = ^{5}⁄_{2} years

I = ^{(P×R×T)}⁄_{100}

= ^{4800×12}⁄_{100} × ^{5}⁄_{2}

= Rs. 1440

Total amount paid = Rs. 4800 + Rs. 1440

= Rs. 6240

Hence, total amount paid to the bank Rs. 6240.

**Example 5.** Find the interest on Rs. 4380 at 12% per annum for 200 days.

**Solution.** Here, P = Rs. 4380, R = 12% and T = 200 days = ^{200}⁄_{365} years

Interest = ^{4380×12}⁄_{100} × ^{200}⁄_{365}

= Rs. 288

Hence, the interest is Rs. 288.

**Example 6.** How many years will Rs. 1250 amount to Rs. 2000 at 8% per annum?

**Solution.** Here, Principal = Rs. 1250, R = 8% and Amount = Rs. 2000

Interest = Total Amount − Principal

= Rs. 2000 − Rs. 1250

= Rs. 750

I = ^{(P×R×T)}⁄_{100}

=> T = ^{100×I}⁄_{P×R}

=> T = ^{100×750}⁄_{1250×8}

=> T = 7.5 Years

Hence, the tenure of the loan is 7.5 years.

**Example 7.** A sum of money doubles itself in 10 years. Find the rate of interest the bank is providing.

**Solution.** Assume that the principal is equal to P.

Then the total Amount is equal to 2P.

Interest = Amount − Principal

= 2P − P

= P

As we know,

I = ^{(P×R×T)}⁄_{100}

=> R = ^{(I×100)}⁄_{P×T}

=> R = ^{(P×100)}⁄_{P×10}

=> R = 10%

Hence, the rate of interest is 10%.

**Example 8.** At what rate of interest per annum simple interest will a sum triple itself in 12 years?

**Solution.** Let's assume Principal = P

Then, total amount = 3P

Interest = 3P − P

= 2P

T = 12 Years

I = ^{(P×R×T)}⁄_{100}

=> 2P = ^{(P×R×12)}⁄_{100}

=> R = ^{200}⁄_{12}

=> R = ^{50}⁄_{3}

=> R = 16^{2}⁄_{3}%

Hence, the rate of interest is 16^{2}⁄_{3}%

## Class-7 Simple Interest Worksheet

## Answer Sheet

**Simple-Interest-Answer**Download the pdf

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